Can Ford Keep Riding America's Recovery Higher?

On Wednesday, Ford (NYSE: F) will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Ford's comeback over recent years has been nothing short of spectacular, as the automaker managed to regain its footing without government assistance to turn the tables on its competitors both in the U.S. and abroad. But how can the company keep its momentum going forward? Let's take an early look at what's been happening with Ford over the past quarter and what we're likely to see in its quarterly report.

Stats on Ford

Analyst EPS Estimate

$0.38

Change From Year-Ago EPS

(2.6%)

Revenue Estimate

$33.78 billion

Change From Year-Ago Revenue

10.6%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Ford keep driving its earnings ahead this quarter? In recent months, analysts have toned down their enthusiasm about Ford's earnings prospects, cutting their estimates for the just-finished quarter by $0.04 per share and more aggressively reducing full-year 2013 earnings-per-share estimates by $0.07. The stock has gotten stuck in reverse as a result, losing almost 10% of its value since mid-January.

Ford has seen dramatic successes in its U.S. market lately, with pent-up demand for new vehicles finally starting to work its way through to new sales. New models in its small fuel-efficient-vehicle segment and strength in its core truck division have bolstered growth, helping Ford take advantage of improved economic conditions for buyers.

But internationally, Ford has a tougher road to follow. On one hand, Europe has been problematic for automakers everywhere, as the weak economy there, combined with the challenges of the European labor markets, has caused losses not only at Ford but also its competitors. In China, though, Ford has lagged behind General Motors (NYSE: GM) , which got a head-start in pushing into the emerging-market country. GM sold six vehicles in China last year for every one that Ford sold, even though Ford's new Focus has been a huge hit in the emerging-market country and could help the company catch up to GM.

The other area for Ford to address is gaining a bigger presence on the luxury end of the market. Toyota's (NYSE: TM) Lexus and GM's Cadillac have both made huge names for themselves for high-end buyers, but Ford has largely missed out on that end of the demographic spectrum. Efforts to reinvigorate its Lincoln division haven't gone as well as many hoped, threatening to leave Ford without an obvious strategy to keep its share of the luxury market.

In Ford's quarterly report, be sure to look beyond the sales figures that we've already gotten to focus instead on whether the company remains on track to score big improvements in profitability, especially overseas. Sales are important, but producing more income from them is the key to future gains for Ford investors, both in the form of further dividend increases as well as share-price increases.

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Why shouldn't GM have a head start, they received in a $100B (bailout funding/tax benefits) from the taxpayers for ACTUAL "out of pocket" of approx. $5.5B (recent buy back of Gov. shares). You can invest a ton in product development and plants with that kind of dough. Yes, GM had a head start on Ford in China, but the GM Bailout per Obamaruptcy put it on steroids!